Suing for severance pay: how to enforce your Abfindung

Can you sue for severance pay?

The honest answer up front: severance pay (Abfindung) usually cannot be sued for directly. A claim "for severance pay" doesn't normally exist, because the law does not recognise a general right to severance pay. Anyone who wants severance pay after a dismissal therefore almost never sues directly for money, but against the dismissal itself.

The route runs via the unfair dismissal claim (Kündigungsschutzklage). Legally, it challenges the validity of the dismissal and formally aims at continuing the employment relationship. In practice, though, it creates exactly the pressure from which a court settlement with severance pay very often results. Severance pay is therefore the result of negotiation and agreement, not the consequence of a claim you can sue for directly.

There are, however, clearly defined exceptions where severance pay is genuinely directly enforceable. We'll look at both routes here.

Why there is no general claim

A widespread misconception is that you get severance pay "automatically" after a dismissal. That's not true. German employment law recognises no general right that guarantees every dismissed employee severance pay.

So why is severance pay so often paid anyway? Because both sides carry risk in an unfair dismissal case: the employer doesn't know for certain whether their dismissal will hold up in court. If they lose, they may have to keep employing you and possibly pay back wages. Employers often buy their way out of this uncertainty with severance pay. Severance pay is therefore the price of planning certainty, not a right that belongs to everyone.

When severance pay is directly enforceable

In these situations, a concrete, enforceable claim exceptionally exists. Here it's no longer a question of whether you get it, only how it's calculated and enforced:

1) Offer under § 1a KSchG

With an operational (redundancy) dismissal, your employer can offer severance pay in the termination letter in exchange for you not filing a claim. The statutory standard amount is 0.5 gross monthly salaries per year of service. The claim arises once the 3-week deadline expires, so it is tied to waiving your right to an unfair dismissal claim. Whether the offer is favourable, or whether a claim would achieve more, should be checked beforehand.

2) Social plan

If there is an operational change (for example, larger-scale job cuts), the employer and works council (Betriebsrat) often agree a social plan (Sozialplan). This can give rise to directly enforceable severance claims. However, a social plan usually only sets minimum standards, in individual cases a claim may achieve more.

3) Contractual promise

If severance pay is promised in your employment contract, in a termination agreement (Aufhebungsvertrag), or in a court settlement, it is binding and enforceable. If payment doesn't materialise, the promised severance pay can, if necessary, be claimed through the courts.

The real route: the unfair dismissal claim

If none of these exceptions apply, the route to severance pay runs via the unfair dismissal claim. It's the most important lever employment law gives you.

The idea behind it: you challenge the dismissal and have a court examine whether it is valid. The greater the likelihood that the dismissal is flawed, the stronger your negotiating position, and the more likely the employer is to pay severance to bring the proceedings to an end.

Typical points of attack that strengthen the lever:

• Formal or procedural errors (for example, a missing or flawed works council consultation)
• Errors in the social selection process for an operational dismissal
• No prior warning notice (Abmahnung) for a conduct-related dismissal
• A weak or contradictory justification for the dismissal

The 3-week deadline (§ 4 KSchG)

The single most important point: from the day you receive the written notice of termination, you have only 3 weeks to file an unfair dismissal claim with the labour court (§ 4 KSchG).

This deadline is a strict cut-off. If it expires without a claim having been filed, the dismissal generally counts as having been valid from the outset (§ 7 KSchG), even if it could otherwise have been successfully challenged. That also removes your lever for severance pay. Simply objecting to your employer does not replace filing a claim.

Calculate your exact deadline to the day: Deadline calculator, how many days do you have left?

Process: conciliation hearing and main hearing

After the claim is filed, the labour court usually schedules a conciliation hearing (Gütetermin) fairly quickly, an early settlement attempt led by the judge. Many proceedings already end here with a settlement covering severance pay, the end date of employment, your reference letter, and remaining holiday.

If no agreement is reached, an exchange of written submissions follows, then the main hearing (Kammertermin). A settlement remains possible at any point there too; otherwise a judgment is issued. Several months often pass between filing the claim and its conclusion, you'll find the details in our guide to the unfair dismissal claim.

The dissolution application (§§ 9, 10 KSchG)

There's one special route where a court actually awards severance pay: the dissolution application under §§ 9, 10 KSchG. It requires that the unfair dismissal claim was successful, meaning the dismissal is invalid.

If continuing the employment relationship is nonetheless unreasonable, the court can, on application, dissolve the employment relationship and order the employer to pay severance. The amount is based on earnings and length of service, up to twelve months' pay, or up to 15 or 18 months' pay for older employees with long service (§ 10 (1), (2) KSchG). The conditions are strict: continued cooperation must be unreasonable for the employee, and even stricter standards apply where the employer applies.

How much? The rule of thumb as a reference figure

The rule of thumb serves as a guide:

0.5 gross monthly salaries × years of service

Important: this is a reference figure for settlement talks, not a guaranteed claim. The actual amount depends on the prospects of success of the claim, your negotiating position, and how willing your employer is to settle. With strong points of attack, the factor is often negotiated upwards; with a weak starting position, it can end up lower. You'll find more on calculation and the 0.25 to 1.5 factors under Severance pay in employment law.

What does it cost? (§ 12a ArbGG)

The fees are based on the amount in dispute, which is usually three gross monthly salaries. This gives rise to legal fees (under the RVG) and, in case of a judgment, court costs. With a settlement, court costs often don't arise at all.

A particular feature of employment law (first instance): each party covers its own legal fees, regardless of who wins (§ 12a ArbGG). So even if you win, you won't get your legal fees reimbursed by your employer.

Depending on your case, these costs can be covered by legal expenses insurance, by legal aid (for lower incomes), or by litigation funding.

Proceeding without cost risk

This is exactly where Team Abfindung comes in. We are a litigation funder, not a law firm: we work with lawyers specialising in employment law and take on the funding of your case. We carry the risk, purely success-based, with no upfront cost. Legal representation is provided by our partner lawyers.

This way, you can enforce your severance pay without having to pay anything upfront yourself. The first step is an initial assessment at no upfront cost: find out in a few minutes what's realistically possible in your case, no obligation and no cost risk.